I am aware that an academic discussion of antitrust policy may seem esoteric against the backdrop of challenges that are far too real for so many Americans. In my view, we are living through the error costs of underenforcement, and we owe it to our future to learn from those mistakes and take action to correct our path. Additionally, Kanter is a longtime opponent of the consumer welfare standard that has undergirded antitrust law for over four decades. Law & Econ. It is the fifth pillar that garnered the most attention and signaled the most meaningful shift. So we must learn from the current structural failures to guide our approach going forward and prepare for the uncertainty that lies ahead. Instead of making judgments easier in hard cases, the consumer welfare standard has often made even the easy cases hard to judge. Biden nominated Khan to serve as an FTC commissioner, not as chair, and withheld that information throughout the entire nomination process. Monopoly maintenance, in the form of moat-building strategies, helps to prevent the erosion of monopoly positions and thereby harms competition. The Bottom-Up Battle Against Corporate Power We owe them better. The vibrant debate around the consumer welfare standard is an attempt to interpret words that are not in the law. 950 Pennsylvania Avenue, NW [10], The Clayton Act is even more explicit. Engrs, 435 U.S. at 695. Does consumer welfare just mean the welfare of consumers, or does it mean something else? Office of Public Affairs 2151 (2013). Lock How do we say were trying to protect small businesses if were not talking to small businesses? 2019). I gave remarks on this point a couple weeks ago. It is no secret that many settlements fail to preserve competition. Q:You mentioned earlier that antitrust has become a bipartisan effort. Do you think that academic capture contributed to what happened to antitrust in the last 40 years? Enforcers attacked companies purely for their size while ignoringbenefits they delivered to American shoppers. . Competition and uncertainty go hand in hand, as firms uncertain of where or how rivalry will emerge will continuously improve their own products and services to stay ahead of the next evolution. Well, my words are always intentional and I was aware of my audience at the time. Mr Biden also appointed Jonathan Kanter, a lawyer who had worked against Google, . I am here to declare that the era of lax enforcement is over, and the new era of vigorous and effective antitrust law enforcement has begun.. As an Executive Branch official, I am obligated to focus on the law as written by the legislature and interpreted by the judiciary. Were going to stick with it, were going to enforce the law to the fullest extent possible, and I think its important that people understand that. I want to express my deepest gratitude to the Antitrust and Trade Regulation Committee of the New York City Bar Association for the invitation to speak with you this evening. of Tradev. United States, 246 U.S. 231, 238 (1918) (restraints legal if they regulat[e] or promote[] competition but illegal if they suppress or destroy it). Professor Handler wrote at the centennial of the Sherman Act in 1990 that the combination of a policy of minimal antitrust enforcement and the glorification of efficiency have reduced antitrust to [a] parlous condition.[16]He wrote that the Sherman Act had been previously understood as a charter of freedom and the economic equivalent of the Bill of Rights, and urged the restoration of vigorous enforcement vital for the preservation of the free enterprise system.[17]Professor Handler reflected an academic perspective that was once well understood but somehow has been forgotten. In his Five Pillar Speech, Kanter identified the five principles of effective antitrust enforcement: Recognizing that the purpose of antitrust law is to protect competition; making the language of antitrust more participatory and inclusive; adapting to market realities, rather than relying on assumptions and static models; reviving enforcement of Section 2 of the Sherman Act, which makes it illegal for any single entity to monopolize, attempt to monopolize, or combine or conspire to monopolize; and enforcing the law through litigation. On July 20, 2021, President Biden nominated Jonathan Kanter, a longtime advocate for more aggressive antitrust enforcement against large technology companies, to lead the Department of Justice's Antitrust Division. of Tradev. United States, 246 U.S. 231, 238 (1918) (restraints legal if they regulat[e] or promote[] competition but illegal if they suppress or destroy it). [The following interview has been edited and condensed for length and clarity]. While current application of the standard is often imperfect, his proposed replacement is conclusory and unhelpful. And I am here to declare that the era of lax enforcement is over, and the new era of vigorous and effective antitrust law enforcement has begun. Even as our economy undergoes revolutionary change, over-reliance on settlement would leave us governed by yesterdays law. When we fail, families struggle to afford groceries. Focusing on competition and the competitive process protects all the benefits of competition, not just the ones we think we can measure or calculate. Whither "Neo-Brandeisian" Antitrust Enforcement: A Candid Conversation He said that while the Chicago School approach is nice and tidy, it doesnt take into account certain kinds of values about the importance of the marketplace of ideas and the free flow of speech in a democratic society and thats going to come at a cost to the public. Share sensitive information only on official, secure websites. The problem is that standards about measuring welfare tradeoffs turn antitrust into a narrow technical exercise that overlooks the realities of our economy. Secure .gov websites use HTTPS And, inevitably, an economy built on the fragile foundations of oligopoly and monopoly will leave us more vulnerable. Each of these five pillars are worthy of longer discussion, so today I will just summarize briefly in the interest of time. Do Consumers Still Reign Supreme in the Antitrust Hierarchy? How But ultimately, our point of view that competition is the best way to ensure that those benefits reach the public. It is the academic gift that keeps on giving. Consumer welfare standard - Wikipedia It is a mistake to confuse one of the laws intended goals with the standard courts are to apply. 202-514-2007, Department of Justice Main Switchboard L. Rev. Our view of what is a reasonable restraint of commerce is controlled by the recognized purpose of the Sherman Law itself.). Big tech wants plain vanilla broadband pricing because it forecloses platform competition. Some progressive politicians and advocates have argued that lax antitrust policies enabled the inflation surge that began in 2021 and that aggressive antitrust enforcement is crucial to combatting inflation. [8]Reiter, 442 U.S. at 33738 (emphasis added) (quotingMandeville Island Farms v. Am. Q:You bemoaned the disappearance of independent expertise. Another example is the refusal to deal paradigm set forth in Trinko and Aspen. Yet somewhere along the way, the antitrust community lost its North Star. [5]Competitively healthy markets offer more economic opportunity and less risk of corporate power dominating our democratic and social wellbeing. Antitrust enforcers must therefore think critically about where their practices, and the cases, reflect outdated assumptions. Its okay to say that out loud. You can follow him on Twitter at @asherschechter. I think it was it was one of the more important inflection points. Guy Rolnik is a Clinical Professor for Strategic Management at the University of Chicago Booth school of Business. This neutral application of antitrust law fosters the robust competition that delivers better prices and better choices for all Americans. Ata certain pointin antitrust, and in every area of lawwe must exercise judgment. The consumer welfare standard protects the competitive process, not individual competitors in a marketplace from being beaten by rival firms. Defining the Consumer Welfare Standard - YouTube . Antitrust law protects competition and the competitive process in service of both prosperity and freedom. Senator Sherman himself expressed a goal of protecting not only consumers, but also sellers of necessary inputs, such as farmers. Co.v. Zenith Radio Corp., 475 U.S. 574, 589 (1986) ([T]here is a consensus among commentators that predatory pricing schemes are rarely tried, and even more rarely successful.). Congress determined to preserve our traditionally competitive economy. There are many strong teams duking it out to win.[23]. Co.v. United States, 356 U.S. 1, 4 (1958) ([T]he policy unequivocally laid down by the [Sherman] Act is competition.), United Statesv. E. I. du Pont de Nemours & Co., 351 U.S. 377, 38586 (1956) (Sherman Act achieves freedom of enterprise from monopoly or restraint), Standard Oil Co.v. FTC, 340 U.S. 231, 248 (1951) (The heart of our national economy policy long has been faith in the value of competition.), Allen Bradley Co.v. Local Union No. Focusing on competition, however, ensures that we remain faithful to the underlying purpose of the antitrust laws, which is that a competitive economy yields innumerable benefits for a free, open and democratic society. All of this is fine as an intellectual exercise, but there is just one problem the phrase consumer welfare standard does not appear in any statute, legislative history, or common-law precedents. 775, 83334 (1965). 283, 287-290 (2001). Should antitrust laws be used to strengthen labor rights? IF YOU ASK FIVE ANTITRUST LAWYERS, WHAT DOES THE CONSUMER WELFARE STANDARD MEAN?, YOULL GET SIX DIFFERENT ANSWERS. Theres a role for economics and antitrust, of course there is. More often than not, courts reject both competing models and do not believe either side. Opponents of the Biden approach are particularly protective of what's known as the "consumer welfare standard" a 40-year-old rule that says government can use antitrust law only to. For more information, please visit ProMarket Policy. [1] Stigler Center, Judge Richard A. Posner in Conversation with Professor Luigi Zingales, YouTube, at 05:20 (Mar. That means individuals and that means individuals from big companies. Jonathan Kanter, have made it a high priority to eliminate the consumer welfare standard that the Supreme . Cases have become sprawling exercises where companies promise billions in efficiencies and armies of consultants argue over newly-invented and often-untested models that they claim show a transparently problematic merger will benefit consumers. Antitrust Enforcement: The Road to Recovery. For each of the handful of times the Supreme Court has mentioned that antitrust is a prescription for consumer welfare, it has a dozen times reminded us that the mandate of the law is competition. Given this lack of transparency and good faith, no Republican should vote to hand the Biden administration another antitrust victory. With every criticism, we get a new definition of consumer welfare that carries the term further from the meaning of the actual words consumer and welfare. At the end of the day, if you ask five antitrust experts what the consumer welfare standard means, you will often get six different answers. Consumer Welfare Standard & Big Tech In a possible departure from Federal Trade Commission ("FTC") Chair Lina Khan, Kanter suggested that he sees no need to depart from the consumer. Jonathan Kanter, the new head of the Department of Justice's antitrust division, used his keynote speech at the Stigler Center's antitrust conference last week to mark a significant shift in the way the US is enforcing its antitrust laws. Co.v. United States, 356 U.S. 1, 4 (1958) ([T]he policy unequivocally laid down by the [Sherman] Act is competition.);United Statesv. E. I. du Pont de Nemours & Co., 351 U.S. 377, 38586 (1956) (Sherman Act achieves freedom of enterprise from monopoly or restraint);Standard Oil Co.v. FTC, 340 U.S. 231, 248 (1951) (The heart of our national economy policy long has been faith in the value of competition.);AllenBradley Co.v. Local Union No. To that end, antitrust is more about protecting what we cannot predict or measure rather than what we can. There are people in the broader community who want to know how we got here and what we can do about it, and we have to make sure were having a conversation thats inclusive and not exclusionary. 2023 Antitrust and Competition Conference - Beyond the Consumer Welfare Full stop.. I am also honored to be giving tonights address in honor of its namesake, Milton Handler. And then there were the old foxes, as he called them, who really knew what theyre doing there were paid by corporations. 710, 72021 (2017); Herbert Hovenkamp, The Antitrust Enterprise: Principle and Execution 3942 (2005). Law enforcers and courts are not central planners capable of consistently making those kinds of measurements. . Antitrust enforcers must also consider whether there is a procompetitive justification for the business conduct in question, and whether the conduct results in countervailing benefits to consumers and competition. Focusing on rivalry and competition lets us decide the tough questions in particular cases as markets evolve. Natl Bank, 374 U.S. 321, 36263, 37172 (1963) ([C]ompetition is our fundamental national economic policy. Rolnik researches and writes about Political Economy, Financial Markets, Antitrust and Regulation. Assistant Attorney General Jonathan Kanter Delivers Keynote at the University of Chicago Stigler Center, https://www.youtube.com/watch?v=JRCm_gJ2EOk, Assistant Attorney General, Jonathan Kanter. He is credited with revolutionizing the Israeli Journalism and media worlds and as bringing dramatic changes to the economic and social discourse in Israel. 7, 10 (1966); Robert H. Bork,The Rule of Reason and the Per Se Concept: Price Fixing and Market Division, 74 Yale L.J. We recently published an updated leniency policy and extended FAQ that reflect this focus on accessibility. Congress prohibited agreements that restrain trade, mergers that substantially lessen competition and conduct that monopolizes markets. Among many other things, the consequences of the pandemic have revealed supply chain fragility. 202-514-2000. How Trust in Institutions Impacts Monetary Policy, Announcing the 2023 Stigler Center Affiliate Fellows, Zero Rating Is The Free Sample In The Internet Ice Cream Store, Address Algorithmic Collusion with Compliance by Design. Kanters remarks at the Stigler conference followed earlier comments he made during the American Association Bars annual conference earlier this month, in which he said, Were not afraid to take big cases and were not afraid to take on big companies. Co. v. United States, 356 U.S. 1, 4 (1958);NCAA v. Bd. of Okla., 468 U.S. 85, 104 & n.27 (1984) (Under the Sherman Act the criterion to be used in judging the validity of a restraint on trade is its impact on competition.);Natl Socy of Pro. They are farmers struggling to find competitive buyers for their livestock. Kanter is no stranger to the antitrust agency. Workers get lower wages. The courts have recognized this. Third, continually adapt antitrust to address todays market realities. Social trust in democratic institutions affects the ability of those institutions to carry out policy. What has happened in recent years is an increasing number of people have had negative experiences with monopolies across a broad range of issues. The idea of the central planning standard is that antitrust enforcers or defendants must model and compute the welfare impacts of a specific merger, or of particular conduct under the rule of reason. And to inaugurate its annual Spring Forum, the Utah Project welcomes two antitrust leaders to deliver keynotes: FTC Commissioner Alvaro Bedoya and Assistant Attorney General for Antitrust Jonathan Kanter. Kanter's five initiatives included focusing on protecting competition, adapting current antitrust laws to reflect market . Preparing for a New Era of Consumer Privacy in Antitrust Enforcement A lock ( The Stigler Center for the Study of the Economy and the State hosted its annual antitrust and competition conference in late April. (PDF) The Behavioral Activation for Depression Scale (BADS We have a civil program and the criminal program. At the same time, a technocratic approach has made antitrust less accessible, and less democratically accountable. We must acknowledge that new market realities demand new approaches to competition enforcement. He also received the Antitrust Divisions highest honor the John Sherman Award in 1998.[15]. Philosopher-king judges handed down incoherent rulings designed to punish political enemies or reward political allies. As the Supreme Court said inPhiladelphia National Bank, competition exists at every level.[18]That includes competition over price, or over whatever consumers provide in exchange for accessing a product or servicewhether thats personal information or data. That brings me to my second pillar. Q:But we are social animals. It is heartwarming to be among so many good friends and colleagues. Our job is to ensure a fair game, not to choose who wins. (2021) (statement of Hon. First, recognize that the goal of antitrust is to protect competition. She specializes in communicating research, data and financial and economic concepts to a variety of audiences. The changes in our economy are not confined to digital markets. 2017 National Lawyers Convention The Mayflower Hotel - East Room 1127 Connecticut Avenue NW Washington, DC 20036 Speakers: Ronald A. Cass Daniel A. Crane Douglas H. Ginsburg Jonathan S. Kanter Brett M. Kavanaugh Barry W. Lynn Kanter would abandon the consumer welfare standard, which developed through decades of common law and expert consensus, in favor of a European-style antitrust approach that ignores harm to consumers and focuses on harm to inefficient competitors. What happened that brought people like you and Lina Khan and Tim Wu to such important regulatory positions? Five Point Plan for Antitrust Law Enforcement Amidst a Competition Crisis. Theres a lot of defensive reaction to the conversation and I get thatI grew up in the antitrust establishment. As our opinion inGlen Holly Entertainment, Inc. v. Tektronix, Inc., 352 F.3d 367 (9th Cir. If confirmed, Kanter would work hand-in-glove with Lina Khan to attack the consumer welfare standard and turn the clock back decades on antitrust law. It cannot be that a business trying to understand the legality of its merger must undertake months of analysis to produce a complex simulation model, or that a court must decide an antitrust case by deciding among dueling consultants white papers reporting on simulations. Notwithstanding the original goals of the law, we saw the emergence of monarchs over the new industries of the digital revolution. We need to use all our tools and understanding to assess how monopolies have arisen and how they are maintained. Over time, antitrust enforcement turned into a mathematical exercise focused on measuring welfare tradeoffs rather than trusting in the benefits of competition. Should The Competitive Process Test Replace The Consumer Welfare Standard? Natl Bank, 374 U.S. at 368. Jonathan Kanter, Assistant Attorney General for the Department of Justice Antitrust Division, recently gave a speech condemning the use of the consumer welfare standard in antitrust cases. What I take issue with is when theres a sense of purity thats being put forward, but the motivations are not pure. Abandoning decades of antitrust precedent won't reduce inflation | The Hill of Okla., 468 U.S. 85, 104 & n.27 (1984) (Under the Sherman Act the criterion to be used in judging the validity of a restraint on trade is its impact on competition.), Natl Socy of Pro. Why is that so important to therejuvenation of American antitrust? Its a necessity. 3, Intl Bhd. FTC and DOJ Announce Project to Develop Progressive Merger Guidelines We need to update our tools to meet the facts, not try to contort the facts to fit out of date tools. People who know me well understand that this has been my philosophy for some time now. Workers, 325 U.S. 797, 809 (1945) (The primary objective of all the Anti-trust legislation has been to preserve business competition and to proscribe business monopoly.);Paramount Famous Lasky Corp. v. United States, 282 U.S. 30, 44 (1930) (In order to establish violation of the Sherman Anti-Trust Act, it is not necessary to show that the challenged arrangement suppresses all competition between the parties or that the parties themselves are discontented with the arrangement. First, what do I mean by competition? Official websites use .gov While there are few certainties in todays world, we can rely on a prediction that that the unpredictable will occur. [8] State Oil Co.v. Khan, 522 U.S. 3, 20 (1997). Share sensitive information only on official, secure websites. This results in less competitive markets with less freedom and less efficiency. Yet Trinko relies on basic understandings about how networks are built and whose investment incentives are most important. People disagree over what a reasonable person would do in a certain situation. II. I think we all have to look in the mirror andunderstand what it is were trying to achieve and why. The consumer welfare standard was originally promised as a solution to the hard cases, but experience has demonstrated just the contrary. The fifth pillar of my plan is to faithfully discharge the divisions affirmative duty to prevent and restrain antitrust violations. That is the fourth pillar we must vigorously enforce Section 2 of the Sherman Act. And if we agree that its important, then we all have a role to play in achieving that mission, just as we all could have a role to play in destroying it. of Elec. They want to replace that standard with a list of rules of fair play among firms. Ry. Washington DC 20530, Office of Public Affairs Direct Line In passing Section 7 of the Clayton Act, Congress sought to outlaw mergers based on whether they may substantially lessen competition or tend to create a monopoly. The words are right there on the page. So, as enforcers, we will remain vigilant and undeterred in our mission to protect competition. . [19]Hearing on Reviving Competition, Part 3: Strengthening the Laws to Address Monopoly Power, Before the H. Subcomm. Lock Yes. on Antitrust, Commercial, and Administrative Law, 117th Cong. [2]In my remarks, I briefly outlined five key principles necessary to restore a competitive, resilient and dynamic American economy.

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